(Bloomberg)—Etsy Inc. says sales on its marketplace, which Etsy refers to as gross merchandise sales, increased 11.7% in the second quarter to $748.03 million from $669.70 million in the year-ago period.
Etsy’s second-quarter revenue rose 19.1% to $101.69 million from $85.35 million a year ago, the e-retailer reported Thursday. Analysts had estimated revenue of $101.3 million. Etsy also said growth in gross merchandise sales, the total value of goods that goes through its platforms, will be higher in the third quarter than the nearly 12% increase in Q2.
The marketplace for unique and handmade goods also reported a profit for the first time since the first quarter of 2016. The company posted net income of $11.67 million, or 10 cents a share, in the three months ended June 30, up from a loss of $7.31 million in the same period a year earlier. Analysts on average expected a loss of 4 cents a share.
Brooklyn-based Etsy, No. 22 in the Internet Retailer 2017 Top 500, has gone through a few tumultuous months after investor pressure led the company to shake up the management team and streamline costs. On May 2, the same day Etsy was set to report earnings in the first quarter, Black-and-White Capital LP disclosed a 2% stake and called on the company to cut operating costs and increase revenue faster. During the preceding few months, the hedge fund had been trying to get Etsy to make changes, including separating the roles of CEO and chairman.
Later that day, Chad Dickerson, who led the company for six years and took it public, stepped down from the board and the CEO post. Etsy also said it would eliminate 80 jobs. In June, Etsy announced another round of job cuts, affecting 15% of its workforce.
Etsy said it expects $35 million in annualized savings as a result of the headcount reductions, reduced third-party expenses and programming costs.
“Since May, we have sharpened our focus and increased the velocity of product experiments and launches, which together, we believe will enable us to accelerate GMS growth in the third quarter compared to the second quarter,” CEO Josh Silverman said Thursday.
Growth in gross merchandise sales had been slowing, so Etsy began focusing on providing more services to artisans and merchants who sell on the website to supplement revenue growth. This segment now accounts for more than half of the company’s revenue. But analysts say marketplace commerce is still fundamental to the health and future potential of the company.
Etsy cut its 2017 forecast on two key metrics. GMS is expected to grow 12% to 14% this year, the company said in a statement late Thursday. That was lowered from a range of 15% to 17% provided in February. Etsy said revenue growth will be 18% to 20%, down from a previous forecast of 20% to 22%.
The stock has increased 15% this year.
Black-and-White has also suggested that Etsy consider selling itself. After the hedge fund took its campaign public, TPG Capital and Dragoneer Investment Group disclosed that they control 8% of the company and have contacted Etsy to discuss “strategic alternatives.”
